The plaintiffs claimed the agency had violated the federal act more than 1,000 times during the past five years by discharging spent fireworks into the alpine lake.

Under the settlement, the authority will step up oversight of the post-fireworks cleanup and establish a hotline for residents to report any debris, Chaplin said.

"We would like to thank everyone for their efforts to bring this to an amicable conclusion," she said in a statement on Tuesday. "Preserving the 4th of July and Labor Day shows and keeping Lake Tahoe and its beaches clean are of the utmost importance to our community."

Plaintiffs Joseph and Joan Truxler said they filed the lawsuit in U.S. District Court in Sacramento in November as a last resort because tourism officials wouldn't respond to their concerns. Since July, they said, they have gathered 8,000 pieces of fireworks pollution from the rockets and flares fired from boats and floating rafts between Zephyr Cove and South Lake Tahoe, Calif.

Joan Truxler said it was never their intention to halt the fireworks and they are "thrilled" the lawsuit has been settled.

Lawyers for both sides met in Sacramento on Monday after the visitors agency voted Thursday night to cancel the July 4 fireworks if a settlement could not be reached by April 4.

The suit said the authority and Pyro Spectaculars North Inc. of Rialto, Calif., should be subject to up to $75 million in fines under the Clean Water Act. Authority leaders said they were confident they would prevail in court but couldn't afford to take that risk.

Pyro Spectaculars has produced large-scale pyrotechnic displays for Super Bowls, Olympics, Disneyland, the Statue of Liberty and Golden Gate Bridge since it was founded in 1979.

Lawyers for the company said in court papers filed in Sacramento on Thursday that the Nevada Division of Environmental Protection and the California Regional Water Control Board have known about the shows for decades and never required a permit under the Clean Water Act. The federal regulations are enforced by states.

Company officials did not immediately return a telephone call seeking comment on Tuesday.

Lt. Gov. Brian Krolicki, who serves as chairman of the Nevada Commission on Tourism, was among those who urged the two sides to resolve the suit outside of court.